As
home prices rose in the years before the Great Recession, complaints about a
shortage of “workforce housing” became common in many communities
throughout Florida. Those complaints are back again, with a vengeance. In most
fast-growing areas of Florida — particularly in South Florida and Orlando —
housing affordability for low- and moderate-income workers is a bigger issue
than ever.

According to the Florida Policy Institute, 36% of Florida households are paying more than 30% of their incomes for housing, including mortgage or rent, utilities, taxes, insurance and neighborhood or condo association fees. Nearly 20% of Floridians are spending more than half of their incomes on housing.

THE ISSUES

Florida’s population growth has increased demand for housing of all types. The state is adding some 335,000 people a year — the equivalent of a city about the size of St. Petersburg. The population is projected to grow 6.5% from 19.9 million in 2016 to 21.5 million in 2020. Recently, rising interest rates have further bumped up the monthly costs of purchasing a home.C

Demand from new residents has driven up median home values at an even greater rate than rents, making
it tougher for lower-wage workers to afford a home — and further increasing
demand for affordable rental housing. Experts estimate that only 31 affordable
rental units are available for every 100 renters who make less than 30% of the
median income in their area. According to Cushman & Wakefield, the median
home value in Miami-Dade is now more than $330,000, meaning a renter who could
afford a 10% down payment on a median-priced home in Miami-Dade would have a
mortgage of about $2,000 — well above the average cost of a Miami-Dade rental.

Local land-use restrictions and impact fees raise construction
costs, preventing the
development of smaller, lower-cost housing units, such as apartments, mobile
homes and mother-in-law suites

Last year, the state’s Sadowski Affordable Housing Trust Fund and other programs helped nearly 25,000 people buy their first home or stay in their home and financed the construction or renovation of about 9,400 affordable rental units. But the Legislature’s diversion of money from the Sadowski Fund has limited its resources.

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Between 1988-98, the
percentage of homes in Florida that were owner-occupied ranged from 64% to 67%.

Homeownership rates
rose from 67% in 1988 to a high of 72.4% in 2006 but then fell back to 67% by
2012.

Homeownership rates
have continued to fall during the recovery from the Great Recession, hitting
64% in early 2018.

Source:
Federal Reserve Bank of St. Louis

Florida’s Most-Expensive Areas

Hourly
wage needed to afford an average two-bedroom apartment:

$29.12 — Monroe County

$27.35 — West Palm Beach

$26.67 — Fort Lauderdale

$25.98 — Miami

$23.46 — Naples

Source:
National Low-Income Housing Coalition, 2018

Rent

Over the course of a
decade, the number of low-income, cost-burdened renter households in South
Florida increased 29% from 202,447 in 2005 to 260,510 in 2015, according to the
Shimberg Center for Housing Studies at the University of Florida.

Between 2000 and
2015, South Florida’s rental housing supply increased by 240,641 units, but the
number of rental units affordable to families making less than 60% of the area
median income actually declined by 84,640, according to the Shimberg Center.
The center considers a housing unit affordable if rent and utilities cost no
more than 40% of household income. In Florida, affordable generally means no
more than $1,180 a month, including utilities, for a one-bedroom unit or $1,420
for a two-bedroom unit. Most low-income renters in Florida are cost-burdened.

Last year, 30,573
apartments were built in Florida, according to RENTCafe.com, a national
apartment search website. The average unit was 996 square feet and rented for
$1,266 a month. RENTCafe projects 25,083 apartments will be built in Florida
this year. New developments range from The Alexander in downtown West Palm
Beach, where rents start at $1,825 and go up to $4,000 for units of between 648
square feet and 1,700 square feet, to City Vista in Pompano Beach, where rents
are regulated at below-market levels — between $408 and $816 for a one-bedroom
unit and $489 to $979 for a two-bedroom unit. Prospective tenants at City Vista
must meet annual income requirements, which range from $21,750 to $43,500 for a
family of four.

Sample Rents (For
a modest two-bedroom apartment)

$1,351 — Fair market rent
in Miami

$1,387 — Fair market rent
in Fort Lauderdale

$1,422 — Fair market rent
in West Palm Beach

Note: Fair market rent is the U.S. Department of Housing and Urban Development’s best estimate of what a family seeking a modest rental home quickly can expect to pay

Supply and Demand

The Orlando Sentinel reported
that approximately 8,000 prospective tenants inquired about 201 available units
when the Pendana at West Lakes development, a mixed-income apartment complex of
one- to three-bedroom apartments, opened near Camping World Stadium. The
complex, now completely occupied, has stopped taking applications. It was
developed by a partnership of affordable housing groups and features a mix of
market-rate and rent-subsidized units. Orlando ranks among the country’s
toughest housing markets for the lowest-income renters, according to the
National Low Income Housing Coalition.

The same supply/demand dynamics are playing out in South Florida. Over the past five years, the region’s population grew by 369,000. During the same period, 42,388 apartment units were built. That’s one unit for every 8.7 net new residents, according to Cushman & Wakefield.

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THE RESPONSES

Targeted
Building

In Miami-Dade County, the school
system and housing department are considering whether to build housing for
teachers as part of a new school in the Brickell area. The county is discussing
the idea with federal officials. Meanwhile, JPMorgan Chase has given a grant to
a non-profit to develop plans for a separate project that would involve
building 300 apartments on the campus of an elementary school north of
downtown, according to the Miami
Herald.

Regulatory
Set-Asides

Since 2006, Palm Beach County has
had a program that allows developers to build at increased densities if they
include a percentage of price-capped, workforce housing units as part of their
developments. The program has largely failed, producing about 870 apartments
and townhomes but no single-family homes. Developers have chosen to pay an
$81,500 “buyout fee” instead of building the workforce housing, according
to the South Florida
Sun-Sentinel. County commissioners are now considering whether to raise
the buyout fee and offer developers even greater density, and a consultant has
recommended offering developers a guaranteed 10% profit on the affordable
housing units.

Help from
the State

In addition to federal programs
administered by the state, Florida has two major affordable housing programs:
The State Housing Initiatives Partnership (SHIP), which gives money to cities
and counties to provide homeownership and rental assistance to low- and
moderate-income residents, and the State Apartment Incentive Loan (SAIL)
program, which provides low-interest loans to developers to build affordable
rental housing.

Both programs fall under the
Sadowski Act trust fund, which the Legislature created in 1992 as a dedicated
funding source for housing programs using doc stamp revenue from real estate
transactions. For the first 10 years, the Legislature routinely appropriated
all the money in the Sadowski fund to affordable housing. In 2003, however, the
Legislature began diverting money in the fund for other purposes, and in 2005,
it set a limit on the amount of doc-stamp revenue the Sadowski fund could
receive at $243 million a year. (Because this was during the housing boom,
annual doc stamp revenue ranged from $450 million to $600 million, well above
today’s levels.) Although it repealed the cap later, the Legislature has
continued to divert money from the Sadowski fund for other purposes.

Since 1992, more than 207,000
housing units statewide have received assistance under SHIP and more than
75,000 units have been financed through SAIL, according to the Florida Housing
Finance Corp., which administers the programs. In all, $4 billion of Sadowski
money has gone to providing affordable housing, while $2 billion has been swept
for other purposes, translating to about 165,000 units foregone.

“It’s become the norm to use the trust fund for member projects or to fill deficits,” says Jaimie Ross, executive director of the Florida Housing Coalition, a Tallahassee-based non-profit that advocates for affordable housing. “Fortunately, this may be coming to an end.”

State Sen. Kathleen Passidomo, R-Naples, plans to introduce a bill next year to stop the raids on the fund. Ross says she’s encouraged that affordable housing has emerged as a top political issue this fall. “We expect there will be more than $300 million in the state and local trust funds for 2019-20, and we need every penny of it and more,” she says.

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Printed Homes

3-D printing involves using heat
and force to fuse materials like powdered metals and plastic. The process
doesn’t require injecting the materials into a mold or carving an object out of
a block of material. Instead, metal or plastic is applied layer by layer until
the object emerges. The “printer” allows for control and precision and
produces very little waste. 3-D printers are now used routinely to manufacture
items like engine parts and prosthetics, including dental implants.

Since the mid-1990s, researchers
have experimented with ways to apply 3-D printing technology to construction.
In recent years, builders in China, the Netherlands and the U.S. have produced
small buildings in which concrete is applied, layer-by-layer, until the basic
structure is completed. In some cases, a crane-like robot with an arm lays down
the concrete; in others, a gantry-like structure allows an applicator nozzle to
move around, dispensing concrete.

The relevance of the technology to
affordable housing is its potential to reduce construction costs. Less than two
years ago, a company called Apis Cor printed a 400-sq.-ft. home in Russia for
about half the cost of traditional construction. In March, a non-profit in
Austin called ICON unveiled a 3-D printed home using a printer it says can
produce a 600- to 800-sq.-ft. structure in less than 24 hours for less than
$4,000.

An
Englewood man, Don Musilli, is trying to bring the technology to Florida. He
got interested in 3-D-printed homes after creating the non-profit Englewood
Innovation Center, which teaches basic 3-D printing skills to K-12 students in
Sarasota County. Since 2012, he has helped place desktop 3-D printers in more
than 50 schools, libraries and youth organizations in Southwest Florida.

Thirty years ago, Musilli founded a
manufacturing company, Pure Air Systems, which he’s since sold, that introduced
high-end air-filtration systems to the residential market. He has now formed 3D
Build Systems to develop a 3-D printer that he says will be able to build the
basic structure of a house in 24 to 36 hours. Each printer will cost more than
$250,000, he says.

Using the printer, a home that
today would cost about $250,000 could be printed for $150,000 or less, Musilli
says. Cost savings come from both materials and labor — only a couple of
workers are required to operate the printer that creates the shell of the
house, with additional labor required to install the roof, windows and plumbing
and electrical systems. Musilli believes the entire process ultimately can be
automated.

Last year, Musilli hired a company
in Ontario to create software to translate architectural plans into printing
instructions that a robot can follow. He now owns the software and is working
with another Canadian company, i-cubed, to develop a robot that can print
cement up to a height of 13 feet and a width of 22 feet, for homes between 400
and 1,900 square feet. He says he hopes to have a robot ready for testing and
fine-tuning by the end of this year. After that, he plans to lease or license
it to local builders.

Obstacles remain, including a lack
of industry standards — and whether the printed structure can meet state
building regulations. “The first thing people ask us is, ‘What about the
building codes?’ The reality is it’s just a different method of making a wall,”
he says.

And even if 3-D printing lowers
construction costs, it can do little about rising land costs and other things
that go into the price of a new home, including impact fees, permits and
utility hookups. Those “soft” costs account for about 40% of a home’s
total construction costs, according to the non-profit Florida Housing
Coalition.

Damon Allen, an adjunct professor
in the School of Construction Management at the University of Florida, says
it’s up to entrepreneurs like Musilli to invest the time and money required to
take 3-D-printed homes mainstream.

“There aren’t a lot of machines available for purchase or use, and there aren’t a lot of companies out there using the technology,” he says. “But the potential of it is great.”

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THE
RESPONSES

Build It
Smaller

Developers and municipalities are
changing building codes to create affordable housing options, allowing for more
density and smaller units.

Micro Apartments

Last November, Miami officials
reduced the minimum allowed size for a micro unit to 275 square feet from 400
square feet. The city also is considering allowing micro-unit developers to
forgo parking for projects close to public transit.

Miami-based Related Group is
building two micro projects in the Wynwood neighborhood. Each unit will have a
kitchen, bathroom and a bedroom. Studios will have bedrooms that double as a
living room. Rents are expected to start at $1,400. To offset the smaller unit
sizes, the buildings will have pools, fitness centers and dog-washing stations,
among other amenities.

In April 2017, West Palm Beach’s
downtown zoning board approved plans by developer Jeff Greene to build 348
apartments of about 450 square feet. Greene said he hoped to set rents at less
than $1,000. He has since pulled his plans, telling the Palm Beach Post he had
underestimated the cost of providing amenities.

Tiny Houses

With many hotel and restaurant
workers priced out of the local housing market, the Keys have become a focal
point of Florida’s affordability crisis. Last year, the situation was made
worse by Hurricane Irma, which destroyed nearly 1,200 homes in Monroe County.

In August, Monroe officials called
for proposals to build “tiny” houses on county-owned land for people
displaced by Irma. Initially, the houses will be used to demonstrate
inexpensive ways to build small, affordable replacement homes.

The county does not define tiny,
but each house must be able to fit on a small lot. Proposals will be scored
higher for “home-like” features, energy efficiency and environmental
sustainability, says Assistant County Administrator Kevin Wilson. The county says
it eventually might use the structures for its own employees. Monroe already
uses county-owned dwelling units at Big Pine Key Park and Key Largo Community
Park to house several employees.

“We want to show that you can
bring an affordable solution for the construction of a house to existing
properties on the Keys and make it sustainable and compliant with all the
codes,” Wilson says.

In St. Petersburg, city officials approved plans for six houses of about 720 square feet at the site of a condemned apartment building due for demolition. Each house will have two bedrooms and a porch and initially be rented out. “A lot of people don’t need much to be comfortable and happy,” developer Pedro Medina told the Tampa Bay Times. “There is something efficient, sexy and modern about tiny houses.”

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Container Housing

Crisis Housing Solutions (CHS), a
Davie-based non-profit founded in the wake of Hurricane Katrina in 2005, aims
to build one of Florida’s first apartment complexes made of repurposed shipping
containers. Last year, CHS received a $450,000 grant from JPMorgan Chase to
create housing in Central Florida for working-class families. The non-profit
estimates that shipping containers can reduce construction costs at least 15%
compared with traditional concrete blocks.

CHS now is working to acquire land
in Central Florida. Mike Smith, deputy director of CHS, envisions units ranging
from 320 square feet for efficiencies to 1,280 square feet for a three-bedroom,
two-bath apartment.

“We could do something on as
little as a half-acre. It would have 16 to 20 units in a three-story
garden-style complex,” Smith says. “The whole purpose of the program is to
come up with a way to reduce construction costs and increase the supply of
affordable rental housing.”